Earthquake in China Burdens on Asian Stock Indices, Including the IHSG
Rising American and European stock indices last Friday, helped to support Asian stock indices today (22 April 2013), including the Indonesia stock index (IHSG). However, the ongoing drama brought on by last Saturday's earthquake in China, impacted on the China stock index as well as on other Asian stock indices, including the IHSG. As the IHSG has been showing signs that it is overbought, market participants preferred to sell portions of their stock portfolios, resulting in a limited fall of the IHSG.
During today's trading day, the IHSG reached its highest level (5,026.92) in the middle of session one, and its lowest level (4,973.58) just before pre-closing. At the end of the trading day, Indonesia's main index stood at 4,996.92, a 0.03 percent decrease. Trade volume and total value of transactions fell, with foreign investors mostly buying Indonesian stocks, while domestic investors mostly sold theirs.
The IDR Rupiah was not able to continue its rebound after being dragged down by the weakening Japanese Yen (in the last G20 meeting, the member countries accepted Japan's stimulus program). The sharp fall of the Yen has succeeded in causing the US dollar to rebound. Previously, the US dollar weakened as it had been expected that the Federal Reserve will maintain its bond-buying program. But the Rupiah's fall was limited as sentiments surrounding Italy's second round parliamentary vote were stable, and because it was reported that Q1-2013 foreign direct investment (FDI) in Indonesia has grown 27.2 percent (YoY) to USD $6.7 billion.
| Source: Bank IndonesiaAsian stock indices were mixed, while China's index fell due to concerns about the consequences of the earthquake in the Sichuan province, which has already taken the lives of 186 people. Insurance stocks led the fall. Along with the weakening Yen, the Nikkei index gained.
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